Hall and the firefighters

Ben Hall has the support of the firefighters’ union. He has also criticized Mayor Parker for not doing enough to deal with the financial stability of the pension funds. How does he reconcile these two seemingly contradictory positions? Not surprisingly, he’s light on the details.

Ben Hall

The fire union’s endorsement puts Hall in a political pickle. He likely cannot avoid talking about pensions, which some City Council members say is the top financial issue facing the city. Yet, he also cannot discuss the topic in a way that risks upsetting some of his most important supporters.

Hall’s campaign website is silent on pensions, but he has not skirted the issue. Asked to elaborate on what Parker is “hiding” about the city’s finances, a charge Hall made in his first TV ad, his spokesman replied, in part, “Our looming pension liabilities are real. What is Parker doing to address them before it is too late?”

Even as he accepted the fire union’s endorsement, Hall added a note of restraint, twice saying “we may not agree on all things.”

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Todd Clark, chairman of the Houston Firefighters’ Retirement and Relief Fund, said he has not spoken to Hall about pensions and is not aware of any proposal the candidate has made.

Hall has spoken of a more creative approach to pensions, such as dividing the 30-year liability into decades and buying insurance to cover the last decade. His press secretary, Julia Smekalina, said several options are being discussed along the lines of dividing the pool of pensioners into groups based on the projected cost of their benefits. Hall was not available for comment Wednesday.

“Ben Hall is proud to be endorsed by Houston firefighters and is committed to constructive dialogue on a variety of issues, including employee pensions,” Smekalina said. “Ben Hall is committed to finding pension solutions that sensibly maintain city fiscal health, while honoring promises to employees and retirees.”

Representatives of the National Institute for Retirement Security, the Center for Retirement Research at Boston College and the Boettner Center for Pensions and Retirement Security at the University of Pennsylvania’s Wharton School said that while Hall’s proposal lacked details, they knew of no examples of the idea being used in public pensions.

Parker campaign spokeswoman Sue Davis said Hall’s solution shows he has not done his homework.

“There is no silver bullet – the math is the math. Several years of poor market conditions and the fact that the workforce is living longer have created this problem,” Davis said. “That’s why Mayor Parker has taken a thoughtful approach, pressing the Legislature for local control and negotiating with stakeholders for a balanced solution that protects both employees and taxpayers.”

It should be noted that the firefighters’ pension fund disputes the assertion that it is insufficiently funded or that the city’s future obligations represent a crisis, so it would have been perfectly consistent for Hall to argue that Mayor Parker has misrepresented and overstated the issue. He has not chosen that path. It should also be noted that this problem has been caused in part by the city underpaying the three pension funds in recent years, for a variety of reasons. It would therefore also be consistent for Hall to say that the city needs to honor its obligations, and if that means raising more revenue here and/or cutting expenditures there to pay for it, then so be it. Again, Hall has not chosen that path. Maybe there’s another path that’s consistent with what the firefighters want, I don’t know. Maybe someday Hall will tell us.

One Comment

While the HFD pension is the best funded of all three, it has had the benefit of avoiding Meet & Confer agreements that allowed the city to underfund the other two by many hundreds of millions of dollars over the years too. Like it or not, this is evidence that local control over a pension system does it more harm than good.

Lest my friends at HFD put on their usual moral superiority about their fund being 95% funded while their police brothers are around 80% and the municipal system not even 60%, all three systems have had similar returns over the years under a 30 year average. Speaking for the municipal workers who gave up an estimated $850 million in benefits over time at one sitting, additional benefit givebacks made since then, we’re not ready to give up anything more until HFD shares some of the pain. At least HPD joined us in working with the city on new employees back in 2004. I hear that give away was worth an estimated $650 million though I have nothing concrete to verify the number.

What is going to have to happen at some point is HFD join us in modifying future benefits for new hires and either lose DROP or reduce it to a five year period. The loss of yearly COLAS might be negotiated to something like a ten year moratorium or alternating years (even years would have no COLA and odd years would have one). Employees could all contribute a few percent more, agree to a lowered spousal benefit like similar plans have, and/or only allow smaller withdrawals over a longer period of time for remaining DROP benefits.

Some changes would restore the pensions to become 100% funded without breaking the city bank down the road, at this point the employee contributions and system returns fund most of the benefits anyway.